It was shocking news to some members of the over-25 crowd to learn that users of SnapChat, the self-destructing photo-sharing app, enjoy the app for purposes other than sexting.

Shocking it may be, but the evidence is mounting. It appears that many SnapChatters often use the service just to send silly pictures to friends without fear that they will be added to the sender’s permanent digital records. Makes perfect sense to me — mullets were practically part of the uniform for my suburban New Jersey high school soccer team in 1987, and I’m sure glad photos from that era aren’t littering my Facebook Timeline.

But that’s not really what interests me most about SnapChat. Faithful readers: You know I have a one-track mind, and SnapChat has me thinking about online advertising — specifically the sorry state of online ad rates.

In 2008 Jeff Zucker, CEO of NBC at the time, made famous a line about “broadcast dollars” becoming “digital pennies,” a quip that captures the phenomenon by which advertisers pay a fraction of traditional-media CPMs for the website version of the same content. A few years later Google chief economist Hal Varian wrote a post that touched on similar issues and their relationship to the newspaper business. In 2010, when he wrote it, he observed that while the Internet has been a boon to news consumption — more people read news, and more of us do so everyday — there’s one aspect of our news-reading that’s gone very much in the wrong direction: The amount of attention we pay to news when we read it online. We spend only 70 seconds per day reading news online; back when we got our news in a paper format, it was 25 minutes per day.

If we’re only fractionally engaged with online content, then, it’s logical that advertisers value online ads at pennies on the dollar.

Part of the explanation for our digital distractedness is the wealth — overabundance?! — of content choices online. But the more significant explanation, I think, is that digital content is inevitably archived and easily searchable. We graze and skim through content now because we know we can go back later, when we will have more time to actually pay attention. Tag it #longreads, push it to Instapaper, or leave open another tab in your browser. Then you can go back later and give it a really thorough read.

I don’t know about you, but I was always much better at pushing stories to Instapaper than I was at actually reading them later. And then I stopped using it altogether.

Snapchat’s time limits make snaps more engaging…. since every message has a time limit, users are present when opening snaps. Snapchat attracts its users’ full attention since they have only a few seconds to capture the details of each message. This engagement makes the experience more satisfying — it feels like a real conversation.

Kind of like live sports or other major TV events, or a magazine story that everyone’s talking about right now. (Or a feature in a live magazine.) What’s the point in watching on your DVR when you know who wins or that Matthew Crawford has already met his untimely death something really big happened last week on Downton Abbey? If you care about that game or that show or the cultural conversation that references them, you need to watch it live and pay attention when you do. That’s programming that demands our engagement, and thus it’s highly valued by advertisers.

Advertisers certainly aren’t going to pay more because your private exchange is more programmatic than your competitor’s. But they almost certainly will if you can find a way — through rich, unique and timely content — to capture reader attention for more than a few seconds every time the engage with your digital product.

What happens when a publisher fails to create quality advertising products designed for its unique content experience (native advertising, broadly defined)?

It concludes, correctly, that it won’t get much of a premium by having human beings sell its not-very-well targeted 300×250 banners. So it offloads its inventory to ad exchanges and networks. Since the exchanges and networks don’t deliver a great CPM for most impressions, the publisher is forced to add more banner placements just to maintain revenue-per-thousand-pageviews levels it achieved two years earlier. Not a pretty picture, no matter how you look at it. The money still isn’t great, and the user experience is horrifying.

Here’s a screenshot from the San Jose Merc website on February 7 snapped by John Battelle. From his post on Searchblog:

Six or more of [ads] in this screenshot, and three more below the fold. There’s a Verizon site wrapper (on either side of the page), an expandable top banner, and three medium rectangle units crammed in there. Not one of them is what you might call a ‘quality’ ad — at least by most standards. (Do you think Verizon is happy that their site takeover is overrun by social media buttons and competing with belly flab, diabetes, Frys’ Electronics and travel pitches?) If you bother to scroll down (who would?) there are three more pitches waiting for you there.

And check out the number of beacons and trackers on the right, in purple. That’s Ghostery, which I run on my browser to see who’s laying down data traps. Man, Merc, that’s a lot o’ data. Are you doing anything with it?

Look, I’ve built my career around ad-supported media, and I continue to believe that advertising (in some shape or form) will support digital publishing. But if there’s one thing you learn early — somewhere around your very first day in the business — advertising does not work if there aren’t consumers on the other end to look at the ads. So if you ad strategy erodes your audience, or merely burns out their eyeballs by way of toxic design, you’ll soon be left without a business at all.

My favorite clip is just before the 2-minute mark, when a mom takes advantage of an early generation of “continuous shooting mode” to capture her kid hopping down a hopscotch course. The camera spits out Polaroid prints like a high-speed printer with its paper tray missing. But don’t stop there, the video also provides instruction on how to open the case and take a picture.

Let’s officially call 2012 the Year of the Imagesphere. To review: Facebook says its users upload more than 300 million photos per day (up from 31 million in 2009). To support this massive interest in photo sharing, the company acquired Instagram in April for $1 billion.

Meanwhile, Pinterest leapt out of the shadows to become the third largest social network (valued at $1.5 billion by investors in May) because of its unique and popular spin on photo curation. Almost exactly a year ago, Twitter launched its own photo sharing, and earlier this month it rolled out photo filters in a bid to steal usage from Instagram. Within days, Instagram responded by disabling integration with Twitter cards and erecting a wall between the two networks that makes it harder for consumers to share Instagram photos via Twitter. And a few weeks ago, the original photo-sharing giant, Flickr, jumped back into the battle with its own sharing app.

The Internet titans are placing big bets on the future businesses that will be built on the 3 trillion (and growing) online images. The unanswered questions: How will publishers, image repositories (such as Flickr or Facebook) and brands capitalize on the imagesphere opportunity? How will content creators turn the act of flipping through galleries and photo feeds into deep engagement? How will advertisers adjust from a marketing rhythm where they produced one beautiful photo every 13 weeks for a print campaign to one where they need 13 photos a day to feed a Tumblr?

And what’s in all of this for consumers? After a decade and a half of presenting consumers with online photos that they can look at — kind of like we look at photo albums at our grandmother’s house — will the Internet finally bring some interactivity to image content and turn photos into a stepping-off point for a richer experience?
It’s clear that consumers are itching for more. They want more depth, interactivity and the opportunity to explore more images beyond those the editor picked to populate a particular gallery. Publishers who want their attention will need to upgrade the photo experience, and advertisers will need to figure out how to tell their stories inside these photo experiences. This means one thing for sure: Brands and publishers need to figure ouhow to extract precise, granular metadata from the Web’s 3 trillion pictures.

Only when publishers know what’s inside images in their archives can they serve readers with additional relevant content from inside each gallery. Every image, then, will launch dozens more galleries — more Angelina Jolie images here, more pictures of fabulous shoes there. They can also monetize photos with precisely targeted ads, just like they do around other content on their sites.

Without image metadata, photos are the dark matter of the ad-server galaxy. Unlock this metadata, and brands will step into the imagesphere as sponsors. Turn those rectangular clusters of pixels into keywords, and ad budgets will support photo content as enthusiastically as they support keywords found in text. Hiring agencies and art directors to produce hundreds of new photo assets each month would break the bank. But attaching a brand’s message to thousands of photos snapped by fans could deliver the same results at a fraction of the cost.

Clearly, this is an emerging trend that Facebook, in particular, is betting on. It ignited consumer hostility by changing Instagram’s terms of service, raising concerns that the new rules would allow the company to license member photos (your personal photos!) to brands or other corporate entities. Instagram co-founder Kevin Systrom responded on the company’s blog that it merely plans “to experiment with innovative advertising,” but will not license user photos to outside parties. It’s not our images Instagram wants — it’s the metadata.

The explosion in the image-based Web isn’t just an issue for brands. Publishers are experimenting with photocentric, responsive-design-oriented tablet sites. They’re also tinkering with images loaded with interactivity, whether as part of editorial or within ad units.

But it’s still early for applications and for ad products associated with images. The big headline in 2013 will be the evolution from photo creation and sharing to getting inside those images. Will you be camera-ready?